DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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- Common-Size Income Statement
- Analysis of Profitability Ratios
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- Current Ratio since 2005
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- Analysis of Debt
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Two-Component Disaggregation of ROE
EQT Corp., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × | |||
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Return on Assets (ROA)
- The Return on Assets exhibited a noticeable downward trend over the five-year period. Starting at a positive 5.11% at the end of 2017, it declined sharply to negative values from 2018 onwards. The ROA dropped to -10.83% in 2018 and, although it improved slightly, remained negative at -6.5% in 2019. The trend of negative returns persisted in 2020 and 2021, with ROA values of -5.34% and -5.35%, respectively. This suggests that the company struggled consistently to generate profits from its assets during these years.
- Financial Leverage
- Financial leverage showed a relatively stable pattern with minor fluctuations. It started at 2.22 in 2017, decreased to 1.89 in 2018, and then maintained a slightly increasing trend from 2019 to 2021, registering ratios of 1.92, 1.96, and 2.15, respectively. The moderate increase toward the end of the period indicates a gradual rise in the use of debt relative to equity, which might reflect changes in the company’s capital structure or financing strategy.
- Return on Equity (ROE)
- Return on Equity followed a trajectory similar to ROA, but with more pronounced fluctuations. ROE was positive at 11.33% in 2017 but underwent a significant decline to -20.48% in 2018. Although it improved over the following years, it remained negative throughout the period, with -12.46% in 2019, -10.45% in 2020, and -11.52% in 2021. These persistent negative values suggest that the company was unable to generate positive returns for shareholders during this timeframe.
Three-Component Disaggregation of ROE
EQT Corp., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Profit Margin
- The net profit margin exhibited significant volatility during the analyzed periods. In 2017, the margin was notably high at 56.9%, indicating strong profitability. However, from 2018 onwards, there was a consistent negative trend, with margins deteriorating to -47.8% in 2018 and further improving slightly in subsequent years but remaining negative throughout, ending at -16.99% in 2021. This pattern reflects persistent challenges in achieving profitability over the later periods.
- Asset Turnover
- The asset turnover ratio showed an overall increasing trend across the years. Starting from a low level of 0.09 in 2017, it rose sharply to 0.23 in 2018, followed by a minor dip to 0.2 in 2019. The ratio then declined to 0.15 in 2020 but rebounded to its highest point of 0.31 in 2021. This indicates improved efficiency in utilizing assets to generate sales over time, especially notable in the final year.
- Financial Leverage
- Financial leverage remained relatively stable with slight fluctuations. It decreased from 2.22 in 2017 to 1.89 in 2018, suggesting reduced reliance on debt. In the following years, it gradually increased to 1.92 in 2019, 1.96 in 2020, and further to 2.15 in 2021, indicating a moderate increase in leverage but still remaining close to the level at the beginning of the period.
- Return on Equity (ROE)
- Return on equity demonstrated a negative trend after 2017, which was the only year with a positive ROE at 11.33%. From 2018 through 2021, ROE was consistently negative, reaching its lowest point at -20.48% in 2018. It slightly improved in 2019 and 2020 but remained below zero, ending at -11.52% in 2021. This suggests continued negative returns for shareholders over the latter years.
Five-Component Disaggregation of ROE
EQT Corp., decomposition of ROE
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden
- The tax burden data is available only for the year ending December 31, 2017, at a ratio of 4.71. No subsequent data is provided, preventing analysis of its trend or impact on the company's financial performance over time.
- Interest Burden
- Interest burden is similarly reported only for the year ending December 31, 2017, with a ratio of 0.66. The absence of data for later periods limits any evaluation of changes in interest expenses or their effect on profitability.
- EBIT Margin
- The EBIT margin exhibits a significant decline starting from 18.41% in 2017, turning sharply negative in subsequent years. It falls to -57.76% in 2018, then slightly improves to -36.86% in 2019 and -37.54% in 2020, followed by a less negative -18.83% in 2021. This indicates substantial operating losses after 2017, though some recovery is visible by 2021.
- Asset Turnover
- Asset turnover demonstrates notable variability and an overall increasing trend. It rises from 0.09 in 2017 to 0.23 in 2018, then slightly declines to 0.20 in 2019 and 0.15 in 2020, before reaching its highest level of 0.31 in 2021. This suggests improved efficiency in utilizing assets to generate sales towards the end of the period.
- Financial Leverage
- Financial leverage declines from 2.22 in 2017 to 1.89 in 2018, then remains relatively stable around 1.9 through 2019 and 2020, before increasing to 2.15 in 2021. This pattern implies a reduction in reliance on debt financing initially, followed by a moderate increase toward the end of the period.
- Return on Equity (ROE)
- ROE follows a downward trajectory from a positive 11.33% in 2017 to negative figures subsequently: -20.48% in 2018, -12.46% in 2019, -10.45% in 2020, and -11.52% in 2021. Despite some fluctuation, the overall negative ROE reflects persistent challenges in generating returns for shareholders after 2017.
- Summary
- The financial data reveals a marked deterioration in profitability metrics after 2017, particularly in EBIT margin and ROE, both showing sustained negative values indicative of operational and net losses. Asset turnover trends suggest fluctuating but improving efficiency in asset use, particularly in the last recorded year. Financial leverage adjustments show initial deleveraging followed by moderate increases by 2021. Overall, the trends highlight a period of financial stress with partial operational recovery towards the end of the analyzed timeframe.
Two-Component Disaggregation of ROA
EQT Corp., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × | |||
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Profit Margin
- The net profit margin exhibited significant volatility over the five-year period. Starting at a robust positive 56.9% in 2017, it sharply declined into negative territory in 2018 at -47.8%. This negative trend persisted through subsequent years, with margins of -32.22% in 2019, -36.49% in 2020, and an improvement to -16.99% in 2021, although still remaining negative. This pattern indicates substantial profitability challenges, with some recovery toward the end of the period but no return to positive margins.
- Asset Turnover
- The asset turnover ratio showed an overall upward trend despite some fluctuations. It increased from a low of 0.09 in 2017 to 0.23 in 2018, followed by a slight decrease to 0.20 in 2019 and a further dip to 0.15 in 2020. In 2021, the ratio rose markedly to 0.31, its highest level in the period analyzed. This suggests an improving efficiency in the utilization of assets to generate sales towards the latter part of the timeline.
- Return on Assets (ROA)
- Return on assets followed a downward trajectory from positive to consistently negative values over the period. Initially, ROA was positive at 5.11% in 2017 but turned negative in 2018 at -10.83%. Although the negative values slightly improved in 2019 (-6.5%) and 2020 (-5.34%), ROA remained negative and relatively flat thereafter, with -5.35% reported in 2021. This indicates ongoing difficulties in generating returns from the company's asset base throughout the period.
Four-Component Disaggregation of ROA
EQT Corp., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | × | |||||
| Dec 31, 2020 | = | × | × | × | |||||
| Dec 31, 2019 | = | × | × | × | |||||
| Dec 31, 2018 | = | × | × | × | |||||
| Dec 31, 2017 | = | × | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden and Interest Burden
- The tax burden and interest burden ratios are only available for the year ending December 31, 2017, at 4.71 and 0.66 respectively. No trend analysis is possible due to missing data for subsequent years.
- EBIT Margin
- The EBIT margin exhibits a significant decline from 18.41% in 2017 to a negative margin of -57.76% in 2018, indicating a sharp deterioration in operating profitability. The margin remains negative in the following years, somewhat improving but still substantially negative at -18.83% by 2021. This pattern suggests sustained operating losses over multiple years, with a partial recovery in the final year observed.
- Asset Turnover
- The asset turnover ratio demonstrates variability over the analyzed period. Starting at a low 0.09 in 2017, it increased markedly to 0.23 in 2018. This is followed by a slight decline to 0.20 in 2019 and further reduction to 0.15 in 2020. However, the ratio improves again to 0.31 in 2021, the highest level recorded in the period. Overall, despite fluctuations, asset utilization appears to have strengthened by the end of the period.
- Return on Assets (ROA)
- Return on assets declines steeply from a positive 5.11% in 2017 to a negative -10.83% in 2018. It remains in negative territory through 2021, ranging between -6.50% and -5.34%. This consistent negative ROA reflects ongoing difficulties in generating returns on assets and indicates persistent unprofitability or operational challenges during these years.
Disaggregation of Net Profit Margin
EQT Corp., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden Ratio
- The tax burden ratio is only reported for the year ending December 31, 2017, at 4.71. There is no data available for subsequent years, making it impossible to assess its trend or impact over the period.
- Interest Burden Ratio
- The interest burden ratio is provided solely for the year ending December 31, 2017, at 0.66. Similar to the tax burden, the absence of data beyond this point prevents analysis of changes in interest-related financial obligations over time.
- EBIT Margin
- The EBIT margin demonstrates a significant decline from a positive 18.41% in 2017 to deeply negative values in the following years. Specifically, it dropped to -57.76% in 2018, improved marginally but remained negative at -36.86% in 2019, -37.54% in 2020, and -18.83% in 2021. This indicates a period of sustained operating losses, although there is a partial recovery trend noticeable by 2021, suggesting some improvement in operating efficiency or revenue generation relative to operating expenses.
- Net Profit Margin
- The net profit margin follows a comparable trajectory to the EBIT margin. Initially very strong at 56.9% in 2017, it sharply declined to -47.8% in 2018, reflecting profitability challenges. Subsequent years show continued negative margins of -32.22% in 2019, -36.49% in 2020, and a less severe negative margin of -16.99% in 2021. This pattern underscores significant net losses over multiple years, with some signs of narrowing losses by 2021, possibly indicating efforts toward restoring profitability.